Healthcare Problems and Solutions

In a Rose Garden press conference on June 23rd, President Obama admitted that if the government gets involved in health care, employers may choose to offer that option in place of the options they are currently offering.

Well, duh.

Let’s all have a collective moment of honesty here. What Obama and his fellow travelers want is the implementation of a single-payer, socialized system of medicine like the ones in Europe and Canada. But saying that is political poison because anybody who pays attention understands that health care in Europe and Canada is way below the standards that we have in America. The reason for that is that socialized medicine simply doesn’t work. It never has, and it never will.

Obama’s stated purpose in getting the government more involved in the health care industry is to “keep costs down.” He thinks that a massive government bureaucracy will be able to provide cheaper care than private companies. On the surface, he’s right. In a government-run system, the cost to the patient in terms of out-of-pocket, hand-it-to-the-receptionist, dollars will be less.

But there’s only one way of getting those costs lower, and that is price controls. Government agents will be looking at every procedure your doctor recommends and deciding whether or not it’s necessary based on actuarial data. You’re 85 years old? What do you need an MRI for? Your blood pressure is 130/90? Well, that’s not high enough to justify blood pressure medicine. Come back when it’s 130/95, unless you’ve stroked out by then.

Consider the Post Office. I recently saw that world-class moron Bill Maher saying that he wanted the government to run health care because of the super efficient way the Post Office operated…drop off a letter for 44 cents and it arrives at its location two days later. But as usual, he’s missing the larger points. The first is that the Post Office is a money-loser. If it were a privately run business it would be bankrupt. We do not pay 44 cents for a letter to be mailed. We pay a considerable amount of taxes and fees to subsidize the unnaturally low price of sending a letter. If the Post Office were privatized and the tax money that supports it returned to taxpayers, we would almost certainly see an increase in the cost of mailing a letter, but we would see a larger decrease in our taxes.

In health care, there are over 1000 insurance companies competing for our money. When Obama says he wants to “introduce competition” he is being ridiculously disingenuous. He wants to introduce an 800-pound gorilla into the competition, one that is so large it is capable of smashing all competitors without even trying.

Why is health care so expensive in this country? There are several reasons but the two biggest reasons are Medicare and Medicaid (that’s government run health care). What Medicare and Medicaid do is keep prices unnaturally low. When doctors provide a service, Medicare and Medicaid pay well below the cost of what the service is actually worth. So how’s a health care provider going to make up the difference? By passing the costs on to the rest of us.

If Obama succeeds in his “health care reform” what is to prevent employers from saying, “We will no longer offer health insurance to our employees now that there is a government option”? The answer is “Nothing.” In order to keep costs “low” as Obama wants to do, the only method is to cut the amount of supply.

Rationing.

Don’t believe me? Look at any other socialized medical system. Every one of them has health care rationing and waiting lists for routine procedures. If we follow Canada’s lead, we will end up with the same health care problems that send thousands of Canadians south of the border to get treatment in America. But where will we go? Hell, where will the Canadians go?

The first thing we need to do is admit that in America we do not have a health care problem. America has the best health care system in the world, and anyone can get treatment whether they have the ability to pay or not. And save me your anecdotes about your uninsured aunt who can’t get her goiter removed. The streets of America are not littered with people being turned away from emergency rooms.

The second thing is to admit that there is a problem with insurance and health care costs. Too many conservatives think the problem is much ado about nothing and are content to kick any health care reforms down the road. So let’s admit right off: The status quo sucks.

Personally, I would love to see America go back to a time before the government and the insurance companies got involved, back when a patient paid a doctor what the service was worth. The price for all of these expensive tests and treatments would be considerably lower without insurance companies footing the bill.

Tort Reform. One of the biggest factors in driving up health care costs are the ridiculous lawsuits filed against doctors. There’s no question that people must be able to sue if a doctor truly botches a procedure and causes lasting harm or death. If I need my right leg amputated and the doctor removes my left by accident, I want to be able to sue. But America is far too litigious, and there are far too many nuisance lawsuits being filed against doctors, and judgments in favor of plaintiffs are out of all proportion to reality. The doctor missed a diagnosis? Sue him for millions. I served on a jury in a malpractice case where a woman sued for a million dollars because the doctor missed a fracture in her foot and set her foot incorrectly. We ruled in her favor, but did not award her a million dollars for having to suffer a slightly stiff ankle that made it hard for her to walk in sand. Other juries would have awarded her the million or more. Congress needs to pass sensible tort reform that caps malpractice judgments. This will lower the price the doctor must pay for malpractice insurance, making it cheaper for the doctor to do business. No cost to taxpayers.

Health Savings Accounts (HSA). There are limited Health Savings Accounts available now through some employers. What they do is allow you to put money aside pre-taxes, like a 401K. The catch is that at the end of the year if you haven’t used the money for medical purposes, you lose the money. We need real HSAs that allow people to set aside money like they would for a 401K or IRA. The money set aside would be placed into funds of the person’s choice and would come off the top of your taxable income. This would provide a tax break for people and allow them to save even more money. Unlike a 401K or IRA, the money can be taken out at any time for medical costs. The money is yours to keep, and yours to leave to beneficiaries when you die. If people set aside a portion of their salaries in interest-earning funds, they would soon have more than enough money set aside to cover normal medical expenses (office visits, basic tests). After awhile, they’d have enough money set aside to pay even for larger expenses. No cost, but a tax savings, to taxpayers.

Allow individuals to shop outside of their state for insurance. Currently if you wish to buy private insurance, you must buy it inside the state in which you live. But because of state regulations and state demographics, some states (like New York and New Jersey) are considerably more expensive than other small, midwestern or Southern states. By allowing people to use their phones and internet connections to shop out of state for insurance, you will introduce competition into the insurance market as insurance companies strive to attract the most clients. No cost to taxpayers.

Allow individuals to choose from a wide range of deductibles. A 21-year old man in good health should be allowed to purchase insurance with a very high deductible, thus paying much less for actual catastrophic health insurance. Going to the doctor for a regular office visit would be paid out of pocket. An older woman with a family history of diabetes might select a lower deductible, and pay more per year for the insurance. The cost of the insurance would be lower than it currently is because of the competition brought to bear by allowing people to shop out of state. The amount of the deductible desired can be determined based on your health, your age, and how much money you’ve put into your HSA. For example, if a 21-year old man new to the work force puts $2000 per year into his HSA, by the time he’s 45 and starting to think seriously about his health he would have $28,000 (without figuring interest) set aside. He would then be able to select a more comprehensive catastrophic insurance plan while still keeping a high deductible. The higher the deductible, the lower the yearly cost of the insurance. The more money you set aside in a tax-saving HSA, the higher the deductible you can afford, the lower the cost of the insurance. No cost to taxpayers.

Allow people to select insurance policies that have a lifetime out-of-pocket expense built in. This would ensure that if you are hit with a string of serious illnesses or accidents, at a certain point insurance would take care of 100%. Remember that as costs go down the deductible money you have set aside in your HSA will cover more. No cost to taxpayers.

The government should mandate that everyone buy health insurance, with a penalty incurred if you do not buy it. The penalty can be age specific. The majority of health care costs are wracked up by the elderly. A 21-year-old man should get a small penalty (say, $2000) if they choose not to get insurance. This would incentive the individual to take the tax savings HSA and buy insurance for a cheaper price than the government penalty. The older you get, the more likely you are to need the services of a doctor, the higher the penalty should be. No cost to taxpayers in general, a cost to those who choose not to participate in the program. Doctors and hospitals can be reimbursed for uninsured patients from the penalties paid to the government. No tax costs, but individuals will need to pay for insurance.

Overhaul Medicare and Medicaid. It’s a pipe dream to wish these Godawful programs into the cornfield. I’d like them to go away completely, but that’s not going to happen. But they should be stripped down, investigated, and have the bureaucracy and fraud cut away. If the HSAs are successful (and they would be…evidenced by the success of 401Ks and IRAs), eventually Medicare and Medicaid would die the graceless death they deserve.

In a nutshell: The price of medical care goes down because doctors are paying less in malpractice insurance, ordering fewer Cover-Your-Ass tests to guard against malpractice suits, and dealing with less time-consuming and resource-consuming red tape. Doctors will get more money because they will be able to charge what a procedure is worth in the market, without charging triple to the insurance company/Medicare/Medicaid in order to be reimbursed for half of what a procedure is worth. Patients will see a reduction in their taxable income resulting in a substantial tax cut, will be able to shop anywhere they want for the best insurance coverage for themselves and their families, and will keep their coverage even if they lose their job. While I’m sure there are considerations that I’ve missed (I’m writing this on the fly), there are no considerations that can’t be figured out within the expansive confines of the free market.

The fact is that healthcare is so expensive right now because it is mired in a tarpit of governmental bureacuracy and insurance company red tape. We need to allow people to use the free market in their dealings with doctors. Let people pay for the routine, and protect themselves against the catastrophic. Would the cost of a doctor visit be more than your current $20 co-pay? Yeah. But the money you would be saving in your HSA would be more than enough to cover it, and that money would lower your tax bill and improve your financial health as it was prepared to stand guard over your physical health in the event of a serious issue.

I know this is probably the longest blog post ever written, but it’s a lot shorter than the 1000+ page healthcare bill in Congress, and it didn’t cost you a dime.

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This entry was posted on Thursday, July 23rd, 2009 at 6:50 pm and is filed under Politics. You can follow any responses to this entry through the RSS 2.0 feed.
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4 Responses to Healthcare Problems and Solutions

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